Each of the manufacturing cost components—direct materials

Each of the manufacturing cost components—direct materials

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Each of the manufacturing cost components—direct materials, direct labor, and manufacturing overhead—are product costs. As the term suggests, product costs are costs that are a necessary and integral part of producing the finished product. Companies record product costs, when incurred, as inventory.
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Unformatted text preview: Under the matching principle, these costs do not become expenses until the company sells the finished goods inventory. At that point, the company records the expense as cost of goods sold....
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This note was uploaded on 12/25/2011 for the course ACCOUNTING ac 202 taught by Professor - during the Fall '11 term at Montgomery.

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